New Accounting Principles and Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2016

New Accounting Principles and Recent Accounting Pronouncements [Abstract]

New Accounting Principles and Recent Accounting Pronouncements

Note B – New Accounting Principles and Recent Accounting Pronouncements

Accounting Principle Adopted

Balance Sheet Classification of Deferred Taxes.  In November 2015, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.  The current requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendment.  The Company is required to adopt the ASU effective in the first quarter of 2017, but early adoption is permitted.  The Company elected to adopt this ASU in 2016 using a retrospective approach.  As a result of adoption, the Company reclassified $51.2 million for the year ended December 31, 2015, from current deferred income tax asset to long term deferred income tax asset, which is included in Deferred charges and other assets in the Consolidated Balance Sheets.

Recent Accounting Pronouncements

Revenue from Contracts with Customers.  In May 2014, the FASB issued an ASU to establish a comprehensive new revenue recognition standard for contracts with customers that will supersede most current revenue recognition requirements and industry-specific guidance.  The codification was amended through additional ASU’s and, as amended, requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.  Additional disclosures will be required to describe the nature, amount, timing and uncertainly of revenue and cash flows from contracts with customers.  The Company is required to adopt the new standard in the first quarter of 2018 using either the retrospective or cumulative effect transition method.  The Company is performing an initial review of contracts in each of its revenue streams and is developing accounting policies to address the provisions of the ASU.  While the Company does not currently expect net earnings to be materially impacted, the Company is analyzing whether total revenues and expenses will be significantly impacted.  The Company continues to evaluate the impact of this and other provisions of the ASU on its accounting policies, internal controls, and consolidated financial statements and related disclosures, and has not finalized any estimates of the potential impacts.  The Company will adopt the new standard on January 1, 2018, using the modified retrospective method with a cumulative adjustment to retained earnings.

Leases.  In February 2016, FASB issued an ASU to increase transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The main difference between previous GAAP and this ASU is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  The new standard is effective for financial statements issued for annual periods beginning after December 15, 2018 and interim periods within those annual periods.  Early adoption is permitted for all entities.  The Company anticipates adopting this guidance in 2019 and is currently analyzing its portfolio of contracts to assessthe impact future adoption of this ASU may have on its consolidated financial statements.

Compensation-Stock Compensation.  In March 2016, the FASB issued an ASU intended to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification within the statement of cash flows.  The amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted for any entity in any interim period or annual period.  The Company will adopt this guidance in 2017 which will not have a material impact on its consolidated financial statements and footnote disclosures.

Statement of Cash Flows.  In August 2016, the FASB issued an ASU to reduce diversity in practice in how certain transactions are classified in the statement of cash flows.  The amendment provides guidance on specific cash flow issues including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instrument with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The ASU is effective for annual and interim periods beginning after December 15, 2017.  The Company is currently assessing the potential impact of this ASU on its consolidated financial statements.

Business Combinations.  In January 2017, the FASB issued an ASU to assist in determining whether a transaction should be accounted for as an acquisition or disposal of assets or as a business.  This ASU provides a screen that when substantially all of the fair value of the gross assets acquired, or disposed of, are concentrated in a single identifiable asset, or a group of similar identifiable assets, the set will not be considered a business.  If the screen is not met, a set must include an input and a substantive process that together significantly contribute to the ability to create an output to be considered a business.  This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a prospective approach, with early adoption permitted for transactions not previously reported in issued financial statements.  The Company will adopt this ASU beginning in 2018 and expects that the adoption of this ASU may have a material impact on future consolidated financial statements as goodwill would not be recorded for acquisitions that are not considered to be businesses.